PepsiCo targets Russia

06 December 2010

MOSCOW: PepsiCo, the food and beverage giant, has made the second biggest acquisition in its history in a bid to gain further ground in Russia.

The US firm has recently purchased Wimm-Bill-Dann, one of Russia's largest juice and dairy manufacturers.

In valuing WBD at around $5.4bn (€4.1bn; £3.5bn), this deal is among the greatest foreign investments in Russia outside the energy industry.

"It gives us a meaningful position in one of the most attractive global food and beverage categories – the fast-growing dairy category," Indra Nooyi, PepsiCo chairman and ceo, said on a conference call.

"Dairy has a huge, untapped potential to bridge snacks and beverages. We see the emerging opportunity to 'snackify' beverages and 'drinkify' snacks as the next frontier in food and beverage convenience".

Hugh Johnston, PepsiCo's chief financial officer, countered claims the American organisation paid over the odds for the latest addition to its portfolio

"I think we're paying a very fair price," he said, adding that attractive margins and growth opportunities meant this investment was a sound decision.

More broadly, the takeover of WBD has cemented Russia's status as a leading major international market for PepsiCo, with anticipated annual revenues of $5bn (€3.8bn; £3.2bn).

PepsiCo will also become a formidable player in the Russian food and drinks sector, where competition with Coca-Cola is rapidly intensifying.

The move should equally help Pepsi achieve its goal of reaching worldwide health and wellness sales of $30bn by 2020.

Data sourced from Wall Street Journal; additional content by Warc staff